your article EPA madness in the February 21
Business Guardian, you appear to equate the statement by
a group of concerned Caribbean citizens calling for a review
of the EPA, with a defence of traditional export preferences.
You go on to argue that sugar preferences have been a disincentive
to modernisation and investment in refined products.
That may well be so. But we believe this misses the point
of the statement and of other concerns about the EPA that
have been expressed in numerous public commentaries (available
at Hyperlink http://normangirvan.info) Please allow us space
in your newspaper to set the record straight.
The central point of the statement is that the EPA is a
treaty that is legally binding, of indefinite duration,
will be very difficult to amend once it is in force, covers
a wide range of subject areas that have hitherto been within
the jurisdiction of domestic or regional policy, and which
few people know about and even less understand.
The areas include services, customs administration, investment,
current account payments, expanded intellectual property
protection, public procurement, electronic commerce, competition,
investment, labour and the environment. There are also tightly
prescribed dispute settlement procedures and implementation
institutions with powers to take binding decisions. Caribbean
countries will be for many years amending their laws, regulations,
policies and practices and setting up new institutions to
comply with the EPA.
Can you imagine a situation where a new Constitution touching
many aspects of the lives of citizens were to be adopted
within two months from publication of the text to provisional
application, without widespread public consultation, dissemination
and opportunity for review?
The EPA is like a new economic constitution regulating many
aspects of our external and domestic policy. If you doubt
us, take even a cursory look at the documentation and the
level of detail of the obligations.
We have heard much about stakeholder dialogue and consultation
but at the end of the day you must agree that public awareness
and understanding about the EPA are utterly inadequate.
Besides, a lot of technical jargon is used that turns off
the majority of people.
Even as we write, the private sector does not know what
import liberalisation commitments have been agreed that
will impact on their businesses (see David Jessops
column of February 24).
Several of us also have specific concerns about the content
of the agreement. The list below is not exhaustive.
The EPA is supposed to promote sustainable development.
This is the mandate set out in the ACP-EU Cotonou Agreement
and it is embodied in several European policy documents
and statements by high officials. But the development component
of the Cariforum EPA has taken a back seat to the trade
and investment liberalisation component.
In order for a reciprocal trade agreement between partners
of highly unequal levels of development to bring the poorer
partners closer to the level of the richer, adequate resources
must be transferred to them to build up their productive
capabilities in infrastructure, human capital, and enterprise
plant, equipment and technology.
In Europe this need is met by the massively endowed structural
funds and the social cohesion funds. But
resource transfers are not part of the legally binding obligations
of the EPA. And the resources provided by the European Development
Fund under the Cotonou Agreement are woefully inadequate.
They amount to €165mn under the 10th EDF, which, when
shared between 15 countries over the five-year period, amounts
to € 2.2 million a country a year.
EDF funds are also notoriously slow in negotiation and disbursement
and the EC has signaled that the priority will be EPA implementation.
The effect or potential effect of tariff elimination on
items representing 82.7 per cent of imports from the EC
needs to be carefully evaluated with respect to government
revenue, income, production and employment; and country
If the net economic effects are negative then this contradicts
the stated objective of the EPA to reduce poverty and a
case may be made for either (a) a longer transition period
or (b) compensatory resource transfers to cushion these
effects. In the absence of this kind of information we are
going into this binding arrangement with our eyes
The Caribbean has had duty-free, quota-free (DFQF) access
to European markets for the majority of its exports since
1975 under the Lome accords. But growth of non-traditional
exports to EU markets has been insignificant.
Market access does not automatically convert to market presence.
There are major complaints from the private sector about
restrictive Rules of Origin and onerous Technical Barriers
to Trade (TBT), including Sanitary and Phytosanitary Standards
(SPS). These obstacles have not been satisfactorily addressed
by the EPA.
I note from your article that you are particularly keen
on the growth of regional sugar refining industries. However,
the EPA Rules of Origin specifically exclude a number of
sugar-based products from cumulation of value
added at least until 2015.
of the EPA
This will obviously inhibit the growth of regional sugar-based
industries for export to Europe.
Cariforum firms, especially SMEs, need targeted product-specific
and firm-specific assistance to raise their supply capabilities
and competitiveness to enable them to meet competition from
duty-free imports from Europe and to take advantage of new
export opportunities. This is absent from the EPA.
The many references to development cooperation in the EPA
are not quantified and time-bound. This leaves the way open
for the EC to decide what to support, when and by how much
without any legal recourse available to Cariforum countries.
As mentioned above, the EC has already signaled that the
priority use of the limited EDF funds will be EPA implementation.
The opening of 29 service sectors and nine professional
services in the EU to Cariforum service providers is highly
conditioned. Service firms must have a contact of at least
one years duration and their employees must have been
working with the providing firm for at least one year. Professionals
are required to have mutual recognition agreements
in force between their own state and the EU state where
they wish to practice.
Further, their entry is subject to an economics needs
test in the EU member state. If they manage to overcome
all these barriers their stay is limited to 90 days in a
calendar year. This is like giving with one hand and taking
With regard to entertainers, many were already gaining entry
to the EU to perform. However, the EPA provisions will now
require entertainers to have university certification or
to be registered locally. Registration systems are at best
embryonic in the region and when established will be required
to meet EC approval. No commitments have been made by the
EC in respect of visa, immigration, work permit and residency
regulations; which as you know are very tight on the EU
side and relatively relaxed on the Cariforum side because
of tourism. So it will still be much more difficult for
us to go there than for them to come here.
Cariforum has committed to opening 75 per cent of its service
sectors to EU service providers for MDCs and 65 per cent
for LDCs in respect of commercial presence.
This opens the way to displacement and/or acquisition of
domestic firms by much larger and better endowed EU firms.
The strategic implications need to be considered for the
vulnerability to foreign decision-making and for the potential
development of Caribbean-owned regional firms that are capable
of going global.
The inclusion of WTO-plus commitments in the
EPA in services, intellectual property, competition, public
procurement, investment and e-commerce is not necessary
to secure approval of the EPA under WTO rules, which require
only WTO compatibility. They will require Cariforum sates
to adopt legislation, regulations, practices, policies and
that will be onerous in terms of money and scare technical
manpower. The costs of compliance have yet to be quantified.
The EC is promising development support for these purposes
but it is not clear why this should be a Cariforum priority.
The WTO-plus commitments pre-empt and proscribe Cariforum
governments policies in key areas of development policy.
They also pre-empt the pending CSME regimes in these areas.
It would have been more desirable to craft CSME regimes
that reflect Caricoms own circumstances, priorities
and development objectives before making commitments to
treatment requirements in the EPA, which forbid governments
from discriminating in favour of local and regional firms,
need to be carefully inventorised and evaluated, as they
may prejudice the ability of governments to foster the development
of local and regional firms capable of competing globally.
The dynamic of the EPA is integration with the EU economy
(and the Dominican Republic) in goods, services, capital
and economic policies. This effectively sidelines the CSME.
The CSME is not an alternative to integration with the world
economy but a platform for more efficient production and
exporting to the world economy and pooled bargaining power.
This path to dealing with globalisation will be ruled out
by the EPA.
The institutional requirements for EPA implementation and
governance are huge and will be demanding on the scarce
money and manpower of Cariforum states.
Also they endow joint committees set up with the Europeans
and the DR with powers to make legally binding decisions.
Cariforum states will have veto powers but the EC will hold
the upper hand because of the leverage of market access
and development assistance. The powers may supersede
Caricoms own organs of governance.
The parties to the EPA are the EC acting on behalf of 27
EU states, which are also parties, and 15 Cariforum states.
Caricom as a juridical entity is not a party and Cariforum
is not a juridical entity and therefore not a party. This
will tilt bargaining power in implementation and on-going
negotiations even more heavily in favour of the EC.
Also, it places Cariforum states in competition with one
another and could lead to a widening of intra-regional inequalities,
as some countries are less well endowed than others to take
advantage of the EPA. Regional disintegration rather than
integration could easily result.
There are several other questionable and disadvantageous
provisions in the EPA that will doubtless become evident
as the details of the agreement are examined.
The EPA provisions establish a dangerous precedent for up-coming
trade agreements to be negotiated with the US and Canada
It might have been better for Cariforum, or at least Caricom,
to have negotiated an EPA limited to what was necessary
for WTO compatibility, with carefully calibrated
import liberalisation attuned to the development of local
production capacities and with specific commitments for
assistance targeted at key infrastructure inputs, firm-level
technical support and establishing market presence in EU
markets. Inclusion of WTO-plus areas in services, competition,
public procurement, and investment could be deferred pending
WTO agreement in these areas, or at least pending completion
of the relevant CSME regimes.
No doubt it will be difficult to adopt such a change in
approach at this late stage. The agreement, though initialed,
has not yet been signed by ministers or given provisional
application (scheduled for April 15). However, once this
happens, revising the EPA would be an exceedingly difficult
and time-consuming process.
Would it not be more prudent to explore all possible avenues
for reviewing and renegotiating the initialed text before
it is cast in stone? (Incidentally, several African countries
have initialed only interim EPAs and have been given until
the end of 2008 to complete negotiations with the EC.)
Prof Havelock Brewster
Prof Norman Girvan
Prof Vaughan Lewis